VeriFone's second quarter revenue increases signal the company is heading in the direction CEO Paul Galant envisioned when becoming the head of the terminal maker in October 2013.
The combination of some early adoption to EMV terminals in the U.S. and strong sales in Africa and Australia fueled the company's revenue to $466.4 million for the second quarter, a 9% increase over the $426 million in the same quarter for 2013.
In the past eight months, Galant has openly discussed VeriFone's various woes, both financially and relationship-wise with its vendors and clients.
In March, he told attendees at a Barclays Emerging Payments conference that VeriFone had to overcome various "self-inflicted wounds" stemming from late certifications, shipments and product launches, while also dealing with deteriorated customer relationships.
At a JPMorgan technology conference last month, Galant stressed that the push to EMV-enabled terminals in the U.S. and unifying its research and development department were keys to the company's future.
"Quarter by quarter we are making progress on becoming one VeriFone," Galant said during a June 5 earnings conference call. "As work to fix our foundation is well underway, we are now starting to draft our next chapter of strategy to deliver growth."
That strategy will focus on VeriFone's payment-as-a-service technology as well as more integrated payments and commerce at the point of sale "as a core extension of our ubiquitous and secure terminals," Galant said.
In the U.S., VeriFone continues to see "an increased sense of urgency among large retailers and merchants to accelerate a technology refresh in advance of any EMV-related liability shifts," Galant said. U.S. merchants who do not meet an October 2015 timeline for being able to accept EMV chip-based cards would carry the financial burden associated with any fraud incidents.
VeriFone began rollouts of EMV-capable terminals at both Kohl's and CVS stores throughout the U.S. during the quarter, Galant said.
EMV sales in the U.S. are just starting to help VeriFone, says Gil Luria, analyst with Los Angeles-based Wedbush Securities. "It may not have been a big contributor in this most recent quarter, but it's starting to show up and that's a good sign because it is going to last a couple of years as retailers upgrade their systems to EMV standards."
Most importantly, VeriFone has "kind of gotten back on its feet after struggling for a few periods," Luria says. "They've gotten everything straightened out in the business and are getting their products out on a global basis while also mending a lot fences."
Verifone's recent deal with Apple Inc. to provide Near Field Communication and EMV chip-and-PIN technology in Apple retail stores indicates the company is looking ahead to opportunities that embrace future POS scenarios, Luria says. "And they will have other deals where they provide the mobile devices, or provide the applications as EMV and NFC grows," he adds.
VeriFone reported revenues of $191 million in Europe, the Middle East and Africa, aided by strong sales in Nigeria and a stronger demand and faster-than-expected terminal rollout in Australia, Marc Rothman, chief financial officer, said during the earnings call.
Net loss attributable to the company fell to $23.9 million during the quarter, a 40% drop from $58.4 million a year earlier.
As part of its ongoing restructuring, the company plans to cut 500 jobs by the end of 2014, from the 5,800 employees at the start of the year. VeriFone cut 150 jobs during the second quarter.